One of the primary advantages of the income statement is that the information provided is directly related to the revenues of the organization. The Advantages and Disadvantages of a Classified Balance Sheet. 2. Audit program can be presented in the court also. Errors and Frauds. Date posted: February 22, 2019. Disadvantages of fixed assets. Advantages of an Audit A professional audit benefits several different parties. Distinguish the advantages and disadvantages of selecting samples Advantages of from AA 11 at University Malaysia Sabah Labuan International Campus Needs Comparison: To make complete usage of all the items in the balance sheet, one must compare the business balance sheet with that of competitors and their own balance sheet over the various accounting periods. Some of the advantages and disadvantages are given below: Advantages. Businesses can manipulate the cash, debtors and creditors data so as to manipulate the lenders. The Balance Sheet records the value of the assets at historical or book value. Draft a form of questionnaire, that you would use to determine the effectiveness of the clientâs internal control over payrolls. It is a synopsis of the financial health of the business as on the last date of the accounting period. Here are the advantages and disadvantages of income statements to review. Disadvantages of Cost Audit Cost audits verify expense records and accounts. Final Audit. It does not consider the real value or market value of assets & liabilities. Inflationary effects. Balancing items is an accounting concept found by deducting the total value of the entries on one side of an account from the total value of entries on the other side. Comparing your current assets to current liabilities determines whether your business c… Discuss the advantages and disadvantages of balance sheet audit. Give a specimen of a qualified report of the auditor. Statutory audit, also known as financial audit, is one of the main types of audit which is to be done as per the statutes applicable to the entity. Advantages of Balance Sheet: Balance Sheet is one of the most valuable parts of the financial statement. What is investigation? ; Cost-effective: In single entry system we not require any accountant and chartered accountant for audit the account so the cost is very less cooperative to double-entry book-keeping system Valuation of Internally Generated Assets: The major limitation of the balance sheet is that only acquired assets are accounted for. Snapshot at a particular date: As a balance sheet depicts financial position as on a particular date, the management or the owners want a balance sheet as healthy as possible. Depreciation on a fixed asset like plant and machinery is constant while the repair cost on such assets will be havier in a later year. List four advantages and four disadvantages of using the risk-based audit approach when auditing the financial statements of limited companies A Auditing and assurance revision Risk based audit approach is wherethe auditor identifies risks that could result in material misstatements in … Assurance of true and fair accounts. The balance sheet audit includes the following: 1. Distinguish investigation from audit. It depicts the financial position of the business as on a particular date. Hence it involves a … Businesses, including small businesses, use balance sheets to measure the company's financial stance at … Easy to understand: A single entry system is very easy to understand even a layman can understand. Balance Sheet is the last and the most important link in the chain of Final Accounts and Statements. Balance Sheet is one of the financial statements that lists business assets, liabilities and ownerâsâ equity on a specified date. Also state the auditorâs position in relation to balance sheet audit. For instance, a high cash balance at the end date of the accounting period should confirm strong liquidity reserves. https://answersheets.in/discuss-the-advantages-and-disadvantages-of-balance-sheet-audit/, Discuss the advantages and disadvantages of balance sheet audit. However, the companyâs intention for the application of cash can be different. How should the enterprise give effect to this change in the method of depreciation? The big three financial statements; income, cash flow, balance sheet, are used best when they are used on a monthly basis for review by the management team Read More Advantages And Disadvantages Of Planning Tools Used For Budgetary Control Final Audit : Advantages and Disadvantages. Discuss the advantages and disadvantages of balance sheet audit. What special points should the auditor consider in conducting audit in the following institutions (a) Charitable institution (b) Educational institution. Auditor can present audit program as proof if he/she has been accused of misfeasance or negligence and can get clearance from such accusation. That the final account presented shows the true and fair picture of the profit and losses and financial position of the concern. On 1.4.2005, the enterprise decides to change the method of depreciation from straight-line to written down value. Unhealthy Relationship. They would just repay the bank debt on the last date, so, as to reduce the debt as on that date. Define âProfessional Misconductâ and state how professional misconduct and professional ethics are related. Disadvantage 4. Would you have any objection as auditor in passing the accounts of the company? Date posted: February 22, 2019. 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